Equity Solicitors v Javid [2009] EWCA Civ 535

Appeal by firm of solicitors against wasted costs order arising from divorce proceedings. Appeal allowed.

The wasted costs had arisen out of divorce proceedings where the wife could only speak Sylheti. As she wished to defend the grant of decree nisi, she approached the appellant firm and one of the partners who could also speak Sylheti acted pro bono for a short while. However as the wife had no means of payment and the firm did not have a legal aid franchise, he also agreed to help find suitable representation. Two days prior to the date of the hearing he spoke to the senior partner of another firm, handed them the file and informed the court that he would not attend the court for the hearing with the replacement firm attending in his place. In the event the replacement firm did not attend either so the hearing was adjourned and the husband’s solicitors applied for a wasted costs order.

The trial judge awarded the wasted costs against the appellant firm partly because he stated that the appellant firm had simply stated in a letter to the court that they had removed themselves from the court record which is incorrect procedure. Holman J rejects this as the appellant should have been able to rely on the replacement firm to file the notice of replacement and the quote used by the judge to sustain his conclusion was inaccurate: the appellant had not stated that he was removing himself from the court record. He then adds a postscript warning of hasty applications for wasted costs which Wilson LJ, in a supplementary judgment, supports as well as adding a note that “This unfortunate matter provides an object lesson to us judges that, when we propose to place decisive reliance upon a letter, we should either quote it accurately or at least summarise it with a punctilious degree of care”

Mr Justice Holman:1. On 16 September 2008, in the Birmingham County Court, HHJ Cardinal ordered that a firm of solicitors, Equity Solicitors, should pay wasted costs in the sum of £981.13. Equity Solicitors now appeal with permission granted by Smith LJ on 27 January 2009 at an oral hearing after a renewed application.

2. The solicitors for the respondent to this appeal (who was the petitioner in the underlying suit for divorce) have submitted a form N260 in which they state that their costs in relation to this appeal alone are £2,250. That may indeed be an entirely appropriate fee for the work done; but the bill illustrates that somewhere in this case all proportionality has been lost sight of when one side alone incurs more than double the costs in relation to the appeal than the amount of costs underlyingly at issue.

3. I need to describe the facts in a little detail. In February 2005 a husband petitioned for divorce. His wife, who does not speak any English but only Sylheti, and whose means are plainly minimal, believed that there was a reconciliation and that the divorce would not proceed further. However, some three years later, during 2008, she received a notice that a decree nisi of divorce would be pronounced on 23 June 2008. This appears to have been a shock to her, and she attended the court that day and informed the judge that she wished to defend and intended to take legal advice. So the judge very appropriately adjourned the date for pronouncement of the decree to 28 July 2008.

4. On 11 July 2008 the wife attended the office of Equity Solicitors, accompanied by a nephew of the husband. There she met a solicitor, Mr Mohammed Tofayel Sattar. Mr Sattar is a salaried partner in the firm of Equity Solicitors and can speak Sylheti. He told the wife that Equity Solicitors do not have a legal aid franchise and that it would be better if she instructed alternative solicitors who would be able to assist her under the Community Legal Funding scheme. Mr Sattar later said in his statement dated 13 August 2008, which was before HHJ Cardinal, that at this point the wife became visibly upset and tearful and pleaded with him to take on her case. As a gesture of goodwill Mr Sattar wrote a letter on behalf of the wife to the husband’s solicitors, Cottams. As I understand it, the gist of that letter, which I personally have not seen, was that the wife considered there was still a possibility of reconciliation and so the petition should, at least for the time being, be stayed.

5. On 15 July 2008 Mr Sattar sent a copy of that letter to the court and also, significantly and fatefully, filed with the court a formal notice of acting which stated that Equity Solicitors had been appointed to act for the wife in the proceedings. Having received no reply to his letter to Cottams, Mr Sattar attended at court on 28 July when the decree nisi was due to be pronounced. As his firm are not franchised for legal aid but the wife could not afford to pay anything privately, Mr Sattar generously attended and acted on a pro bono basis. Nevertheless, even if he had not previously filed a notice of acting, he would certainly have to have done so before speaking on her behalf on that day.

6. The judge made an order on 28 July which read in part as follows:

“Upon hearing solicitors for both parties;

IT IS ORDERED THAT:

1. The [wife] shall by … 4 August 2008 file and serve an affidavit stating why no answer has been filed in time and exhibiting a draft of the answer.

2. The [wife] is deemed to have applied for leave to file an answer out of time.

3. This case be listed for directions and consideration of the [wife’s] application on 6 August 2008 …”

So 6 August 2008 was plainly going to be an important hearing.

7. I now take up the account in Mr Sattar’s own words in his statement dated 13 August 2008, which I stress was before HHJ Cardinal when he later made the wasted costs order. Starting at paragraph 11, Mr Sattar said as follows:

“11. On 31 July 2008 I had a long meeting with the respondent. I explained to her the outcome of the hearing. I informed the respondent that her husband had instructed his solicitors to proceed with the divorce as quickly as possible, it was then unlikely that he would agree to a reconciliation. I explained to the respondent the directions given by the court and that it was listed for further consideration one week later on 6 August 2008.

12. I advised the respondent that I simply would not be able to carry on with her claim on a pro bono basis and that I would require some payment. It was clear that the respondent simply could not afford to defend the claim on a private basis. I therefore agreed with the respondent to try and locate a firm of solicitors in Birmingham with a legal aid franchise and a Sylheti speaking solicitor.

13. As the hearing was for the following week there was not enough time for the respondent to instruct new solicitors, for them to prepare the Answer and affidavit and serve this at court. I therefore agreed to draft the Answer and affidavit and lodge these at court for the respondent.”

I now reach a paragraph of the utmost importance to this case. Mr Sattar continued:

“14. On the same day [viz 31 July] I contacted Rashid & Co solicitors and I spoke to the senior partner, a Mr Tariq Rashid. Mr Rashid confirmed that there was a Sylheti speaking paralegal at their office and that Rashid & Co had a legal aid franchise for family matters. Mr Rashid stated that Rashid & Co would be able to attend the hearing. I made an appointment [viz with Rashid & Co] for the respondent for 11.00am on 4 August 2008.”

Pausing there, that paragraph contains clear evidence from Mr Sattar, which has never been controverted, that he had personally spoken on 31 July with the senior partner of Rashid & Co and, most importantly, that Mr Rashid had stated that that firm would be able to attend the hearing. The statement continued:

“15. On 4 August 2008 at 8.30am I personally went to Rashid & Co and handed over a copy of the file including the respondent’s affidavit and Answer. On the same day a copy of the Answer and affidavit were served at court and Cottams. On 5 August I notified the court that Equity Solicitors would not be attending the hearing on 6 August 2008.”

8. On 4 August 2008 and consistent with the above narrative, Mr Sattar wrote three letters. One was to the court simply enclosing the affidavit and draft answer which he had prepared for the wife. The second was to the wife herself in which he clearly explained to her the arrangements he had made with Rashid & Co. As that letter was written on 4 August 2008, before the later events of 6 August and the threat to Mr Sattar of a wasted costs order being made, it is important to quote from it at some length. The letter reads as follows:

“Further to our conversation today I am writing to confirm your appointment with Rashid & Co Solicitors. The appointment is as follows:-

I have notified Mr Rashid at Rashid & Co about the directions hearing. I am informed that someone at their office will be able to attend the hearing with you on 6 August 2008 … I have notified the court and Cottams that we will not be attending court on 6 August 2008.

In view of the hearing on 6 August 2008 I have personally taken a copy of your file by hand, including the affidavit and Answer, to Rashid & Co. A copy of my covering letter to Rashid & Co dated 04/04/08 is attached.

As we are no longer instructed in this matter I will now close your file.”

The third letter was indeed that letter to Rashid & Co of which he attached a copy to the wife. That letter says in part:

We are instructed by the respondent in the above divorce proceedings. Unfortunately as the respondent is unable to continue funding the matter on a private basis we have referred our client to Rashid & Co. We understand that you will be able to assist and advice the respondent either on the Legal Help scheme or Community Legal Funding …

Please note that the matter is listed for a directions hearing and consideration of the respondent’s application to serve an Answer out of time on 6th August 2008.

We have lodged at court a copy of the affidavit and the draft copy of the respondent’s Answer to the petition dated January 2006, as per the order dated 28 July 2008.

If you have any queries please do not hesitate to contact the writer.”

9. On the next day, namely 5 August, Mr Sattar wrote two further letters. One was to Cottams. It reads as follows:

“Further to the above matter we write to notify Cottams that as of 4 August 2008 the respondent is represented in the above matter by Rashid & Co solicitors who we understand are able to assist and advise the respondent on the Legal Help and/or Community Legal Funding scheme. Accordingly we will not be attending the above hearing.”

The other letter of 5 August was to the court itself. I must quote it in full since it was decisive to the reasoning of the judge. It reads as follows:

Further to the above matter we write to notify the court that as of 4 August 2008 the respondent is represented in the above matter by Rashid & Co solicitors who we understand are able to assist and advise the respondent on the Legal Help and/or Community Legal Funding scheme. Accordingly we will not be attending the above hearing.

Yours faithfully

EQUITY SOLICITORS”

Entirely consistent with all those letters, neither Mr Sattar nor anyone else from Equity Solicitors attended the hearing on 6 August 2008. It transpired that no one from Rashid & Co attended either, although the wife personally did do so.

10. Upon the application of the solicitors for the husband, HHJ Cardinal made the following order on 6 August:

“UPON hearing the solicitor to the petitioner

AND UPON the respondent attending today in person, and the court noting that Equity Solicitors remain on the court record and have failed to attend court as is their duty this day

AND UPON no interpreter having been provided for the respondent and the court being unable therefore to proceed with the application

AND UPON the application made in the face of the court by Messrs Cottams solicitors for a wasted costs order against Equity Solicitors

IT IS ORDERED THAT

1. The application for leave to file an answer out of time and the wasted costs order be adjourned to 16 September 2008 …

2. The solicitors for the respondent (Equity) shall lodge and serve a statement dealing with why they should not meet the costs of the application adjourned today by … 13 August 2008.

3. Messrs Cottams shall file and serve their costs statement together with any reply to the statement of Messrs Equity Solicitors by … at least two working days before the next hearing …”

11. It was in response to that order that Mr Sattar made his statement of 13 August 2008 from which I have already quoted. Mr Sattar continued that statement by saying:

“17. I placed on hold all my other files/matters simply to help the [wife] who was clearly in a very difficult position. I took the time, trouble and inconvenience to assist the [wife]. I did everything conceivable to help the [wife] and I did not charge for this work. I believe that I did far more than most solicitors would have done in the same circumstances, and all at my own expense.

18. I am saddened by the fact that, not only is the court unable to recognise this, moreover Equity Solicitors are actually being [held] accountable for the costs …

20. Equity Solicitors did not attend on 6 August as the [wife] had instructed Rashid & Co solicitors who had agreed to attend the hearing …

22. The [wife] had instructed Rashid & Co, Rashid & Co had accepted these instructions, the file had been formally transferred to Rashid & Co and the court had been notified that Equity Solicitors would not be attending. In these circumstances I believe that Equity Solicitors have relinquished their instructions and accordingly were not under any duty/obligation to attend the hearing on 6 August 2008

23. In view of the above I believe that a costs order against Equity Solicitors is unreasonable, unsustainable and wholly unjust.”

12. Pausing there, within paragraph 22, which has never been controverted, Mr Sattar clearly stated that the wife had instructed Rashid & Co, that that firm had accepted instructions, and that the file had been formally transferred to that firm.

13. Notwithstanding that statement by Mr Sattar and that history, on 16 September HHJ Cardinal made an order in the following terms:

“IT IS ORDERED THAT

In view of the respondent’s failure to file evidence and instruct a solicitor to argue the issue of the late application for leave to file an answer out of time, the deemed application for leave be dismissed.

The decree nisi is hereby pronounced. Equity solicitors shall pay wasted costs of Cottams from 6 August 2008 and 16 August 2008 in the sum of £981.13, to be paid within 21 days.”

The reference to 16 August appears to be a slip and should refer to 16 September 2008, ie part of the costs of the hearing on that date itself.

14. It is plain from paragraph 4 of his judgment that HHJ Cardinal placed weight on the fact that Equity Solicitors were still on the record as acting for the wife. He referred in that paragraph to the “professional obligation” of Mr Sattar to attend court on 6 August. At paragraph 7 of his judgment the judge said:

“Mr Sattar wrote a letter to the court, which portrays an ignorance of proper procedure, which simply said that ‘We have removed ourselves from the court record’. A solicitor should know that he cannot do that; he is obliged to attend court when he is on the court record unless and until he removes himself or unless and until either the client files a notice of acting in person or a notice of change of solicitor has been filed by another firm, and, of course, neither of those two actions were taken. A solicitor should not leave a client in limbo who cannot speak English.”

With respect to the judge, that paragraph contains a significant and actually somewhat surprising error. The judge purports to quote from the letter Mr Sattar had written to the court on 5 August, which I have already quoted in full. Within the official transcript of his judgment, as approved by HHJ Cardinal himself, the quotation is actually placed within quotation marks. The judge quotes Mr Sattar as saying: “We have removed ourselves from the court record”. But I have already quoted the whole of that letter of 5 August in full. Nowhere does Mr Sattar use the words attributed to him by HHJ Cardinal and nowhere does he claim or assert that by that letter Equity Solicitors are removing themselves from the record. It follows, therefore, that the strictures of the judge in paragraph 7 were not fair or justified.

15. At paragraph 9 of his judgment HHJ Cardinal said:

“The sad aspect of Mr Sattar’s statement is that, to a certain extent, he did what he could to help his client. His error was to put himself on the court record and therefore effectively to send Mrs Begum, the respondent, unrepresented and unassisted on 6 August. That might have happened anyway if she had been unable to obtain legal representation, but what he did was simply send her even without an independent interpreter to a hearing which, on the face of it, he ought to have attended.”

16. With respect to HHJ Cardinal, that was not an accurate or fair description of what, on his uncontroverted statement of evidence, Mr Sattar had done. He had not “effectively sent her unrepresented and unassisted” to court on 6 August and did not “simply send her” there; rather, as Mr Sattar had made clear in each of his letters of 4 and 5 August to the wife, to Cottams, to Rashid & Co and to the court, and as he had later described in his statement, Mr Sattar had gone to considerable lengths to ensure that Rashid & Co would represent her and attend on her behalf.

17. HHJ Cardinal went on to conclude that, while Mr Sattar had not acted either improperly or unreasonably, he had nevertheless acted negligently so as to trigger the wasted costs jurisdiction. At paragraph 10 of his judgment he said:

“… did he act negligently? I am afraid that the answer to that is that he did because he knew he should have come to court having foolishly put himself on the court record. It is a lesson to be learned.”

18. Pausing there, it seems to me, with respect, that it was particularly mistaken and unfair of HHJ Cardinal to characterise Mr Sattar as having “foolishly” put himself on the court record. Mr Sattar had generously gone to court on 28 July 2008 and taken other steps, such as filing her affidavit and answer, to help this wife. He could not have taken those steps without putting his firm on the court record, and it does not seem to me that there was anything “foolish” about it. HHJ Cardinal continued at paragraph 11:

“… and in a sense Mr Sattar has repeated the error today inasmuch as he is still on the court record and he is still obliged therefore to represent his client but has today declined to do so on the basis that he is without instructions.”

19. Further on in his judgment HHJ Cardinal did of course refer to the fact that Mr Sattar had, on his evidence, transferred the case to Rashid & Co. The judge said at paragraph 13 of his judgment, and this is a paragraph upon which Mr Dingle Clark has particularly fastened today on behalf of the respondent:

“… [Mr Sattar] argues ‘Well, I have been let down. I personally went to Rashid & Co, handed the file, etcetera, to them, and I was assured they were attending’. That is a matter between him and Rashid & Co, as Mr Cottam pithily put it, and I entirely and respectfully agree with him, he really ought to have sorted that matter out with Rashid & Co, and once he knew that no notice of change had been served on him, it was open to him to file an application to come off the court record or indeed to attend on the 6th and to ask to be released from the court on that day.”

20. HHJ Cardinal concluded at paragraph 14 by saying:

“So it seems to me that there are wasted costs in this matter, they have been brought about by Mr Sattar’s conduct, even though I entirely accept in doing so he acted in a way that he thought was best, and it is most unfortunate that his lack of knowledge – and I do put it down to that – of how to come off the court record and what one’s obligations are have led to costs being wasted, but wasted they have been. So in those circumstances I am going to make a wasted costs order against Equity Solicitors but only for the hearing of 6 August.”

Pausing there, when HHJ Cardinal said “only for the hearing of 6 August” he was dealing, I think, with the fact that initially the solicitors for the husband had sought on the back of these events to present Equity Solicitors with a bill for all or most of their costs of the whole proceedings. In the event, the order that the judge made included the costs of 6 August and a part -- but only a part -- of the costs of the hearing on 16 September itself.

21. So in paragraph 14 the judge reverted by inference to what he had mistakenly said in paragraph 7 about Mr Sattar’s “lack of knowledge” about how to come off the record. As HHJ Cardinal himself said in paragraph 7 of his judgment, one method whereby one solicitor ceases to be on the record is the filing of a notice of change by another firm. In the light of all the steps Mr Sattar had taken to arrange for Rashid & Co to see the wife and to act for her, including obtaining their assurance that Rashid & Co would represent her on 6 August, it seems to me that Mr Sattar was fully entitled to rely upon Rashid & Co doing just that. If Rashid & Co had attended on 6 August they would necessarily have to have filed a notice of change and placed themselves on the record, which would have had the effect of formally removing Equity Solicitors from the record.

22. In my view there were at least three errors in the approach of HHJ Cardinal, as I have already identified. First, he mistakenly thought that, by their letter to the court of 5 August, Equity Solicitors had purported to remove themselves from the record by the wrong method. They had not in fact done so. Second, he referred to, but then failed to give any weight to, the arrangements which Mr Sattar had so clearly made for Rashid & Co to take over the case. Third, and as a result, the judge wrongly and unfairly characterised Mr Sattar as “simply sending” the wife unrepresented to the hearing on 6 August in breach of some continuing duty which the judge conceived that Mr Sattar owed to her and/or to the court.

23. During the course of his submissions today on behalf of the respondent to this appeal (ie the husband), Mr Dingle Clark has particularly fastened on the passage in paragraph 13 of the judgment of HHJ Cardinal which I have quoted above. Mr Clark submitted that that is the main point in this case. His submission is that it was not sufficient for Mr Sattar to rely on what Mr Tariq Rashid had told him when Mr Sattar went to see Mr Rashid. He submits that all of that was, as the judge said in paragraph 13, between Mr Sattar and Rashid & Co, and that it should have been sorted out reliably between Mr Sattar and Rashid & Co. Mr Clark adopted the closing words of the judge in paragraph 13, and submitted that once Mr Sattar knew that no notice of change had been served on him he should have at least himself filed a notice of change and indeed personally attended the hearing on 6 August. Mr Dingle Clark submitted that Mr Sattar was negligent in failing to do so. He submitted that it was negligent of Mr Sattar not to check that a notice of change had indeed been filed by Rashid & Co, or at any rate that the omission of Mr Sattar in that regard fell below the standards of a competent solicitor.

24. I cannot accept that submission. It seems to me that, in circumstances such as this, a partner in one firm of solicitors who has a clear conversation with the senior partner, no less, of another firm of solicitors must be entitled to place reliance on assurances that he has been given. There was no particular necessity for Rashid & Co to file a notice of change before 6 August itself. It seems to me that Mr Sattar was fully entitled to rely upon what Mr Rashid had told him. He was entitled confidently to assume that Rashid & Co would send a representative on 6 August; and confidently to assume that, on that date if not before, Rashid & Co would file a formal notice of change.

25. I, for my part, consider that Mr Sattar was not in any way negligent in this matter and did not in any way fall below the standards of a competent solicitor. Rather, he acted as a good Samaritan and did all he could to help this vulnerable lady whilst making perfectly plain to her, to Cottams and to the court that he could not do more. It was not justifiable to make any order for wasted costs against his firm and, indeed, he should be thanked, and I now personally thank him, for his generous and public-spirited services. I, for my part, would allow this appeal and set aside that sentence of the order made on 16 September 2008 which orders Equity Solicitors to pay wasted costs in the sum of £981.13.

26. I would add a postscript. As so often, this case seems to me to be a cautionary tale against hasty and insufficiently considered applications for wasted costs orders. It may well be that the initial reaction of Cottams to apply for such an order on 6 August itself was justifiable. At that stage Cottams did not fully know what had passed between Mr Sattar and Rashid & Co. But Cottams should have reconsidered very carefully once they had received Mr Sattar’s statement of 13 August. In my view, it was ill-judged of them to press on with their application and, as I have concluded, wrong of HHJ Cardinal to make the order. Inevitably and justifiably, Equity Solicitors have wished to appeal against what they rightly considered to be an unjust order. In the process, completely disproportionate costs and time have now been incurred, as I have described, and someone will have to pay for them.

Lord Justice Wilson:27. I agree with every part of my Lord’s judgment including his postscript. This unfortunate matter provides an object lesson to us judges that, when we propose to place decisive reliance upon a letter, we should either quote it accurately or at least summarise it with a punctilious degree of care. Central to Judge Cardinal’s dispatch of the application was his view that Mr Sattar had purported to remove his firm from the record in a wholly impermissible way and that such was evidenced by Mr Sattar’s letter to the court on behalf of his firm dated 5 August 2008. The crux of the judge’s judgment that that letter betrayed a wholly inadequate understanding on the part of Mr Sattar as to how a firm might be removed from the record as representing a litigant; and that his failure to understand proper procedures in that respect (of course for this purpose contained in the Rules of the Supreme Court 1965, which still apply to family proceedings) was what had caused costs of the husband to be wasted. But, as my Lord has demonstrated, notwithstanding that the judge purported, by the use of inverted commas, actually to quote from Mr Sattar’s letter to the court dated 5 August 2008, it was in no way an accurate quotation; nor did it even properly summarise the gist of the letter which Equity Solicitors, by Mr Sattar, sent to the court that day.

28. What was or should have been of decisive relevance to the dispatch of the application was the assertion of Mr Sattar in his statement dated 13 August 2008 that Mr Rashid had agreed to represent, or to arrange for the representation of, the wife at the hearing on 6 August 2008. Nor was Mr Sattar first making that assertion ex post facto, in response to the application for wasted costs. Most significantly, he had informed the wife, by his letter dated 4 August 2008, that he had been informed by Mr Rashid that someone at their office would be attending the hearing on her behalf on 6 August. Thus what should have been the decisive feature of the case was the assurance of Mr Rashid to Mr Sattar that Rashid and Co would be representing the wife on that date. Mr Clark, who has done his best in extremely difficult circumstances today, suggested to us that, notwithstanding Mr Rashid’s assurance to Mr Sattar on 31 July, it behove Mr Sattar nearer to 6 August to check with Mr Rashid that indeed the wife would be so represented by his firm. I share my Lord’s rejection of that point.

29. There were two consequences of Mr Rashid’s assurance to Mr Sattar that he would arrange representation for the wife on that date. First, in that they were to represent the wife on that date, Rashid & Co would be obliged to file a notice of change of solicitors, which would have the effect of removing Equity Solicitors from the record as representing the wife. Second, the observations by the judge that Mr Sattar must have known that the wife would be attending the hearing alone and that it was entirely inappropriate for Mr Sattar to have allowed her to do so are entirely inconsistent with the assurance which Mr Rashid had given to Mr Sattar. When we pressed Mr Clark as to whether he could defend the judge’s criticisms of Mr Sattar for in effect condemning the wife to attend the hearing alone, he was driven to suggest that the construction properly to be placed on the judgment was that the judge did not feel able entirely to accept what Mr Sattar had said. But there was not a scintilla of evidence to justify doubt about Mr Sattar’s evidence as to the assurances which Mr Rashid had given to him.

30. For those reasons, as well as those given by my Lord, I would allow the appeal.